Five officials charged with misusing public funds, burying hazardous waste at Central Valley water district

It started a year ago when state investigators uncovered 86 drums holding thousands of gallons of hazardous waste illegally buried in a rural Central Valley water district yard.

Their probe quickly widened to include allegations of misconduct that were revealed in a state audit. Soon, authorities said, they discovered that officials running the Panoche Water District misused more than $100,000 in public funds on various personal items and expenses, including slot machines, concert tickets, home improvements and Porsche upgrades.

Now, five current and former water district officials — including former General Manager Dennis Falaschi — are facing felony charges in the corruption probe, according to the California attorney general’s office.

Four of them have been arrested, and one is expected to surrender Friday, said the state Department of Toxic Substances Control. It is unclear whether any of the accused have retained attorneys.

“In California, those in public posts who abuse the public’s trust for personal gain will be held accountable,” Atty. Gen. Xavier Becerra said in a statement. “The California Department of Justice will investigate and prosecute those who embezzle and misuse public funds.”

Authorities said Thursday that Falaschi ran the agency “as his own personal operation and bank account” between 2011 and 2016. He faces eight felony charges, including six counts of embezzlement and misappropriation of public funds.

Also charged were Julie Cascia, the district’s former office manager, who allegedly used department-issued credit cards and money orders for personal expenses, and Falaschi’s son Atomic, who took 1,500 pistachio trees from the agency to use on his own property, according to the complaint.

Two other former employees — Jack Hurley and Dubby West — were charged with disposing barrels of hazardous waste without permits.

When authorities dug up the buried waste last year, they discovered that the drums — which contained chlorine, caustic soda, iron chloride and a mixture of used antifreeze, used solvents and used oil — were leaking into the ground. Officials said Thursday that the contamination is being cleaned up.

Cascia and West were also charged with illegally transporting hazardous waste to a landfill in Los Banos, officials said.

The district, which serves an area of about 38,000 acres in the Central Valley, delivers water to western Merced and Fresno counties. It is overseen by a five-member board of directors made up of landowners.

The alleged misconduct was first identified by state auditors, who last year released a scathing report lambasting the district for providing employees with perks that included free housing, interest-free loans and credit cards used to pay for sports and concert tickets.

From 2013 to 2015, employees used district credit cards to purchase tickets to Oakland A’s and Oakland Raiders games, tickets to a Katy Perry concert and retail goods from Ralph Lauren, Nike and Sunglass Hut, the audit found.

Reimbursement collection procedures were so lax that one employee did not repay personal expenses charged to the district for nearly three years, according to the audit.

At the time, state Controller Betty T. Yee called the lack of spending oversight “shocking.”

“It is especially troubling in a region where effective water governance is so vital for the agricultural community,” she said.

alene.tchekmedyian@latimes.com

Twitter: @AleneTchek